A lesson learnt – Failure to keep good records resulted in an unnecessary tax bill

A recent HMRC case highlights the importance of good record keeping; in this instance in relation to properties.

In this case the Tribunal were satisfied that improvements had been made during ownership, sums which are usually deductible in calculating the profit on the sale of a building.

However, whilst the taxpayer could point to the amounts paid out of his bank account he could not provide supporting evidence to detail what the expenditure was in relation to and so it was held a deduction could not be justified.

This case proves the importance of keeping good records – had the required evidence been available this taxpayer would have saved a considerable amount of tax.